Paying the Price to Keep Government’s Best Workers

Trying to retain its most talented employees in a competitive job market, North Carolina gave thousands of them a pay raise.

You run an important state data center. Google and Facebook have moved in nearby and are offering top dollar for skilled workers. How do you retain your best employees? When it comes to situations like this one, governments often lose talented workers because their bureaucracies either prevent them from offering the pay raises needed for them to retain the workers or make it difficult to do so in a timely manner.

The data center example is among the challenges that convinced North Carolina to confront the employee recruitment and retention problem. The state put $7.5 million into a fund this year to help retain workers in high-demand fields and has used the money to hike the annual pay of nearly 3,500 employees by an average of $2,500, or 4 percent.

State agencies made $18.4 million in requests for pay raises from the fund, and the state personnel office was tasked with making the call about who should get increases that totaled $8.3 million (an additional $800,000 came from the federal government and other sources).

Gov. Pat McCrory told the Raleigh News & Observer, "I can't keep nurses because [private] hospitals pay much more than state government." Doctors and nurses earning less than market wages made up more than a thousand of the recipients of money from the fund. And when the state auditor's office saw high turnover among auditors and was having trouble recruiting qualified replacements, it used money from the fund to offer salaries closer to the market rate.

Hopefully the fund won't be a one-time program for North Carolina. If it does continue -- and hopefully grow -- there are two areas in particular in which due vigilance on the part of the state personnel office will be important. First, existing employees who receive the raises should not only work in high-demand fields but also should be outstanding performers.

Second, the personnel office must continue to perform its own due diligence and not rely solely on agency requests to determine who should get raises. Based on my own experience in two stints in state government, the temptation to treat everyone the same regardless of performance is often too great among managers who deal with candidates for the increases on a daily basis.

Dana Cope, the executive director of the State Employees Association of North Carolina, says the fund doesn't go far enough, and he's right. Taxpayers' return on their investment in retaining excellent employees in high-demand fields will be a handsome one. Let's hope the practice expands in North Carolina and spreads to more states confronting the lure of the likes of Google and Facebook.